Williams-Sonoma Posts 2Q Profit of $399,000
August 26, 2009
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Multi-channel home furnishings retailer Williams-Sonoma Inc. (WSM) reported second-quarter profit of $399,000 for the period ended Aug. 3, compared to a $18.4 million earned in the same quarter last year.
Lower costs and inventory offset weaker demand for home furnishings. Sales for the quarter totaled $672 million, an 18 percent decline from the $819.6 million posted in the same quarter last year. Same-store sales in the quarter dropped 15 percent.
The San Francisco-based company said it's also raising its forecast for the third quarter after second-quarter sales turned out to be at the high of its previous projection.
Looking forward to the third quarter, management forecast a profit, excluding items of 1 cent to 5 cents a share with revenue of as much as $700 million. Same-store sales are expected to be off by as much as 13 percent.
"Substantially better-than-expected earnings in the second quarter were primarily driven by stronger than anticipated merchandise margins and ongoing cost containment initiatives," said Howard Lester, chairman and chief executive officer. "These results, in addition to a 21 percent year-over-year decline in merchandise inventories, contributed to a $127 million increase in our cash balance to $165 million. Revenue during the quarter continued to trend at the high end of our expectations—and we continued to focus on the aspects of the business we could control ..."
The company, which operates Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Williams-Sonoma and Williams-Sonoma Home, got rid of 1.2 million square feet of distribution capacity and 80,000 square feet of leased office space. Lester said both initiatives will be completed by the end of the third quarter and will reduce future infrastructure pre-tax costs by about $13 million a year. The retailer also plans to close 16 stores by the end of the year.
Lower costs and inventory offset weaker demand for home furnishings. Sales for the quarter totaled $672 million, an 18 percent decline from the $819.6 million posted in the same quarter last year. Same-store sales in the quarter dropped 15 percent.
The San Francisco-based company said it's also raising its forecast for the third quarter after second-quarter sales turned out to be at the high of its previous projection.
Looking forward to the third quarter, management forecast a profit, excluding items of 1 cent to 5 cents a share with revenue of as much as $700 million. Same-store sales are expected to be off by as much as 13 percent.
"Substantially better-than-expected earnings in the second quarter were primarily driven by stronger than anticipated merchandise margins and ongoing cost containment initiatives," said Howard Lester, chairman and chief executive officer. "These results, in addition to a 21 percent year-over-year decline in merchandise inventories, contributed to a $127 million increase in our cash balance to $165 million. Revenue during the quarter continued to trend at the high end of our expectations—and we continued to focus on the aspects of the business we could control ..."
The company, which operates Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Williams-Sonoma and Williams-Sonoma Home, got rid of 1.2 million square feet of distribution capacity and 80,000 square feet of leased office space. Lester said both initiatives will be completed by the end of the third quarter and will reduce future infrastructure pre-tax costs by about $13 million a year. The retailer also plans to close 16 stores by the end of the year.
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